One of the realizations that I made throughout my MBA journey, is how little many event planners know about business. This industry is full of amazingly talented and creative people whose sole purpose in life is to create fantastic events and experiences for their clients and guests. The challenge is that many of those people don’t spend enough time focusing on their own business. I was one of those people! I spent my time focusing on the clients and the creative, and didn’t pay as much attention to the needs of my business. I did the best that I knew how, and our business was growing faster than I was able to handle. Our sales revenues went through the roof, but my lack of knowledge in growth strategies and understanding of financial statements made for challenging times even though we were generally doing very well. Although we had a lot of quality control and policies and procedures, I didn’t monitor cash flow, develop realistic strategies, and hired too many staff. I just wanted to grow as quickly as possible thinking that this was the answer. Instead, I was working nearly 24 hour days with a great deal of stress.
So why does this happen? Not many event planners get into the industry because their market research identified an opportunity in the market. Most planners get into this industry because they love events and pursue their passions. They love the creativity – the look on people’s faces when they’re having the time of their lives. In fact, if they could afford to, they would do it for free because they love it so much! So…isn’t that fantastic? What’s the problem with that you ask? Well, many planners and suppliers in the industry struggle with the day to day running of their businesses. At almost every industry conference I attend, I talk to planners who’s businesses are suffering financially, or the planner is physically and mentally exhausted with running a business. They are tired, and often hate dealing with the business and just want to focus on doing the other things that they like best. What many don’t realize is that there is a better way, but running a business brings an entirely different skill set than creatively designing an event.
Of course, you move forward the best way you know how, and the way that has been working (or not working) for you for so many years. However, investing in a little education, coaching, or consulting could help provide some clarity on what you’ve been doing right, and what you could do better. Simple things, such as developing policies and procedures in writing, or understanding your financial statements to really understand your current position and ability to sustain what you’re doing. As an example, planners tend to give away much more than they should. Although it’s great for the clients, it’s just simply bad business. The equivalent would be Best Buy just throwing in a surround sound system with a purchase of a TV, just because it would make your experience so much better! It’s true it would, but how many sound systems would they give away before it became unsustainable for their business? If planners and suppliers took the time to analyze how much they discount or give away in a year, and what impact this has on their business, they would not do it as much. To illustrate, a decor supplier decides to throw in some extra set pieces because it would really enhance the event. There is a cost to store those set pieces, and to keep the warehouse at the right temperature and humidity so they don’t get damaged. Not to mention that the supplier now has to cover the labour costs of that “little bit” more time it takes to load the truck, set it up, etc. etc. The items don’t just sit on a shelf doing nothing. There’s a cost associated with that, and the supplier needs to recover their expenses somehow. If you took a close look at what it costs to throw something in, you would really think twice about doing it. However, it is important to note that “throwing things in” has almost developed as a cultural norm in the event industry, and if you feel it’s important to do this in order to maintain a competitive advantage, then that’s ok! You just need to make sure that you understand your costs, and have some sort of plan to ensure that they are covered somehow. Otherwise, your profit margin drops with every free item you throw in.
Event planners need to be just as passionate about their business as the events they produce. While they focus on creativity, their cash flow could be going down the drain along with their ability to grow or simply sustain operations. They may have a mission and vision, but do they know how to apply it? Understanding accounting principles, cash flow, business and marketing strategy, human resources, as well as a whole host of other business fundamentals is a key to success. If you look at the most successful event companies out there, you’ll likely find that the owners know a great deal about business. Yes, they know how to produce amazing events, but they also know their business inside out, especially the numbers. They spend the time to work ON their business, not just in their business. If you’re struggling, or experiencing consistent ups and downs in your event business, it might be a good idea to take the time to better understand why it’s happening.
Don’t hate business. Focus on it! Embrace it so you can do what you love with less stress and more joy. Learn! Don’t just read event and design magazines, read business publications. Harvard Business Review has some great articles and even an app for iPhones. Take some classes, get an MBA, or hire a business coach or consultant to help as well as teach you. I went back to school, and it was one of the best decisions I’ve made in my life.